The Senate Standing Committee on Finance has taken a firm stand against the proposed restructuring of the Federal Board of Revenue (FBR) ahead of the impending general elections. FBR Chairman Malik Amjad Zubair Tiwana revealed the intricacies of the restructuring plan, indicating that it would necessitate significant legal changes, entailing about 1,000 amendments to existing laws and rules. This restructuring would result in the fragmentation of the FBR into six or seven distinct entities, including the Federal Board of Customs, Federal Board of Inland Revenue, Tax Policy Division, Tax Policy Office, and directorate generals of evaluations.
Tiwana emphasized that the Special Investment Facilitation Council (SIFC) had given a one-month timeline to implement the proposed restructuring. The Senate committee, headed by Senator Saleem Mandviwalla, expressed concerns over the constitutional legitimacy of the interim government’s inclination to introduce restructuring and new laws without a proper mandate.
Notably, the FBR has been performing well in the current fiscal year, and the committee’s opposition raises apprehensions about potential disruptions in revenue collection. This is especially critical as officers from the Inland Revenue Service have threatened a nationwide strike, and internal differences between the Customs Service Group and the Inland Revenue Service further complicate the situation.
If the proposed restructuring plan is put into action, the FBR would transition into a public-private partnership company, representing a significant departure from its current structure. Senator Farooq H Naeek, a former Law Minister and committee member from the PPP, voiced strong opposition, characterizing the proposed setup as drastic and revolutionary, suggesting that the caretaker government should exercise caution.
Senator Sadia Abbasi from the PPP also echoed these sentiments, urging the interim government to refrain from any actions falling outside its mandate. The Senate Standing Committee on Finance’s opposition potentially weakens the interim government’s case, particularly with only 21 days left until the general elections.
In addition to addressing the FBR restructuring issue, the committee also scrutinized the State-Owned Enterprises (SOEs) Act 2023. Despite being touted as a success story by the Ministry of Finance, flaws in the preparation of the SOE Act were revealed during the committee proceedings. The committee unanimously approved amendments proposed by Senator Bahramand Khan Tangi to strengthen the law, focusing on minimizing conflicts of interest, preventing misuse of public resources, and improving the criteria for selecting chief executive officers of SOEs.
One notable amendment approved by the committee is the introduction of a minimum experience condition for the appointment of the chief executive officer, requiring a minimum of 10 years of experience. This move aims to address the current provision that allows any graduate with zero experience to be appointed as the chief executive officer of a government-owned company. The committee’s actions underscore the importance of ensuring qualified individuals with relevant experience lead these enterprises.
However, it was surprising that the Secretary of Finance, Imdad Ullah Bosal, opposed an amendment related to setting a minimum experience requirement for the chief executive officer’s appointment. The committee also approved an amendment stipulating that SOEs’ resources cannot be used for personal monetary and political benefits, a move that was opposed by the secretary of finance.
Senator Tangi emphasized the need to prevent political parties from exploiting the resources of power distribution companies to influence voters. Furthermore, the committee approved amendments to strengthen the SOE Act despite the secretary of finance admitting that the rules under the SOE Act 2023 have not yet been framed. This raised concerns among committee members, particularly Senator Farooq Hamid Naek, who questioned the operational viability of a law without the approval of accompanying rules.